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Case Carlill v Carbolic Smoke Ball Co 
Facts An advert placed for 'smoke balls' to prevent influenza. offered to pay £100 if anyone contracted influenza after using the ball. Deposited £1,000 with the Alliance Bank to show their sincerity in the matter. The plaintiff bought one of the balls but contracted influenza
Held she was entitled to recover as (a) The deposit of money showed an intention to be bound, therefore the advert was an offer; (b) It was possible to make an offer to the world at large, which is accepted by anyone who buys a smoke-ball; (c) The offer of protection would cover the period of use; and (d) The buying and using of the smoke-ball amounted to acceptance. The court dismissed the case. There cannot be assent without knowledge of the offer; and ignorance of the offer is the same thing whether it is due to never hearing of it or
Acceptance of R v Clarke The Government offered a offer has to be reward for information  communicated. leading to the arrest of certain murderers and a pardon to an accomplice who gave the
information. Clarke saw the forgetting it after hearing." proclamation. He gave information which led to the conviction of the murderers. He admitted that his only object in doing so was to clear himself of a charge of murder and that he had no intention of claiming the reward at that time. He sued the Crown for the reward Revocation has to be communicated. Byrne V An offer made on 1st October Leon Van (In Cardiff). Claimant (in  New York) received it on 11th & send acceptance at once. In the main time the defendant change his mind and sent a letter of revocation on 8th Oct. Revocation letter The revocation was not complete until it had been communicated to the offeree. This was on 15th October. In the main time, however the offer had been accepted. As a result the revocation was ineffective & the contract did exist. The defendant was therefore liable under the contract.
reached on 15th Oct. Revocation can Dickinson Dodds offered to sell his be v Dodds house to Dickinson, the offer communicated being open until 9am Friday.  by a reliable On Thursday, Dodds sold the source. house to Allan. Dickinson was told of the sale by Berry, the estate agent, and he delivered an acceptance before 9am Friday. Offer does not Errington A father bought a house on laps with death mortgage for his son and v of offeree and Errington daughter-in-law and promised remains valid if them that if they paid off the  consideration is mortgage, they could have the being made. house. They began to do this but before they had finished paying, the father died. His As the Claimant knew that the defendant was no longer in a position to sell the property to him the defendant had drawn his offer validly. It was impossible, therefore, to say there was ever that existence of the same mind between the two parties which is essential in point of law to the making of an agreement. The father's promise was a unilateral contract - a promise of the house in return for their act of paying the installments. It could not be revoked by him once the couple entered on performance of the act. The couple was entitled to continue paying the installments and claim the house
when the mortgage has been fully paid off. .widow claimed the house.
The law of contract the display of an .000 had been unconditionally accepted. According to the in the window.A counter offer revokes the original offer. there existed no obligation of any sort between the parties. therefore. H offered £950 27 June W rejected H's offer 29 June H offered £1000. in law. Products on display are only an Fisher v A shopkeeper displayed a The knife had not. Hyde v Wrench  . W refused to sell and H sued for breach of contract Held that if the defendant's offer to sell for £1. It was not afterwards competent for the plaintiff to revive the proposal of the defendant. and thereby rejected the offer previously made by the defendant. there would have been a binding contract.6 June W offered to sell his estate to H for £1000. been Bell  flick knife with a price tag 'offered for sale. instead the plaintiff made an offer of his own of £950. by tendering an acceptance of it. and that.
An Offer must be distinguished from a mere supply of information An Harris v Auction of sale of furniture advertisemen Nickerson was advertised in a t is only an newspaper London broker  invitation to saw the advertisement and It was not an offer as it was not clear definite or unequivocal from the advertisement that the auctioneer wanted to sell the items . for £900 asked by you”. The defendant reply was “lowest cash price is £900”. Restriction of Offensive Weapons Act 1959 made it an offence to 'offer for sale' a 'flick knife'.. It is in no sense an offer for sale the acceptance of which constitutes a contract. article with a price on it in a shop window is merely an invitation to treat. The plaintiff telegraphed “we agree to buy …. Telegraph lowest cash price. It was held that the defendant’s telegram was not an offer but simply an indication of minimum price the defendant would want. The shopkeeper was prosecuted in the magistrates' court Harvey v Facey  The plaintiff sent a telegram to the defendant to sell property.invitation to treat and not an offer.
Felthouse v F wrote to his nephew It was held that there was no Bindley offering to buy the nephews contract the uncle had no right to . travel to London to attend the sale the items had been withdrawn from the sale before he arrived he claimed that his action of attending the auction amounted to an acceptance of an offer as result he claimed that contract has been breeched and sued for damages. Offeror asked for the offer to be accepted by registered post the offeree accepted the by an ordinary letter which arrived promptly of furniture to the broker the auctioneer had no intention to be bound to this broker it was a mere statement of intention. Silence does not amount The offeror had suffered no disadvantage in a way that the offer had been accepted as the offeror did not put a condition specifying that the acceptance could only be made by registered post the acceptance was valid.treat and not an offer. Acceptance Yates is valid if buildings v sent in time R J Pulleyn by any more & Sons unless  exclusively specified.
Acceptance must be communicat ed through authorized person. that is.  horse for £30.15 and adding impose upon the nephew to sell “if I hear no more about his horse. Later the managers appointed someone else. Powell v The plaintiff applied for a Lee  job as headmaster & the school managers decided to appoint him. I will consider the given any written proof. told the plaintiff he had been accepted. The defendant A binding contract was made wrote to the plaintiff when the plaintiff posted the letter . the managers. horse mine. The nephew had not him. The nephew never replied. The plaintiff sued alleging that by breach of a contract to employ him Postal Rule: Adams v Lindsell 2 Sept. There was no contract as there had been no authorised communication of intention to contract on the part of the body. One of them. acting without authority.to acceptance. alleged to be a party to the contract.
acceptance is received the plaintiff's complete as soon as the acceptance but on 8 acceptance is posted. had sold the goods to a destroyed or lost in the post so that it never reaches the third party. so the asking for a reply "in the defendant was in breach of course of post" contract.A letter of acceptance once posted is deemed accepted. Sept even if the letter is delayed. Consideratio n: Price paid by Currie v . The Postal Rule – If acceptance by post has been requested or where it is an appropriate and reasonable means of communication 9 Sept. The plaintiff received the letter and sent a letter of acceptance. offeror. 5 Sept. The defendant between parties. (1818) offering to sell goods of acceptance on 5 Sept.
each party to Misa  the contract for the other party’s promise. He attended court and sued for the He had not provided consideration as he was legally obliged to attend under the summon (Written command to a person to appear in court.a.) .00 rent p. Consideratio n need not be adequate (satisfactory) but must be valuable (beneficial). and keep the house in repair was binding Collins v Godefory  A witness legally required to attend the court was promised payment if he would attend the court and give evidence. Performance of existing legal obligation does not amount to Thomas v Thomas  A promise to convey a house to a widow on her promise to pay £1.
Williams realized the fact that he underestimated the cost of the work and was in financial difficulties. Thus the captain did not have to pay the extra money. . but later refused to pay Roffey had a contract to refurbish a block of flats sub-contracted the work to Williams . Performance of existing duty doest not amount to consideratio n. As the sailors were already bound by their contract to sail back and to meet such emergencies of the voyage. The captain promised to pay the remaining crew extra money if they sailed the ship back. promising to sail back was not valid consideration.work begun . then that agreement is binding if the party agreeing to pay the bonus has thereby obtained Contract Williams v holds if work Roffey is done in (1990) time and both parties take practical benefit from it. Stilk v Myrick  promise Two out of eleven sailors deserted a ship. Held that where a party to an existing contract later agrees to pay an extra "bonus" in order to ensure that the other party performs his obligations under the contract.consideratio n.
undermanned since extra pay was offer to the crew if they remain loyal The promise of extra money was recoverable by seaman who remained loyal since they were now working in a dangerous situation (they were doing more than required in there original contract) . William did not receive full payment – Work stopped Roffey argued that Williams was only doing what he was contractually bound to do and so had not provided consideration. contract with the owner). Performance beyond existing duty amounts to consideratio n.Roffey (to avoid foul of a some new practical advantage penalty clause in his main or avoided a disadvantage. agreed to pay Williams an extra payment per flat. Hartley v Ponsonby  A high number of desertions from a merchant ship rendered the vessel unseeworthy.
Past Re McArdle consideratio  n is no consideratio n. The wife of one of the children did some decorating and later the children promised to pay her £488 and they signed a document to this effect.  claimant £100 and £200 in consideration of his then intended marriage and after the marriage had taken place they confirm their agreement in writing. A wife and her three grown-up children lived together in a house. Tweddle v The claimant’s father and Son-in-law could not sue because Atkinson father-in-law agreed with he had not provided each other to pay the consideration. It was held that the promise was unenforceable as all the work had been done before the promise was made and was therefore past consideration Privity of contract: Only parties to the contract can sue each other. £200 was not paid and the .
A. C promised his nephew. A had provided consideration for the uncle’s promise as he was initially under a duty to fiancée not to uncle. even though A was already obliged to marry B. .against Dr Foakes with interest. She agreed that she The interest was recoverable. but by entering into the agreement with the uncle he had put himself under an obligation to him too. Mrs Beer had obtained judgment for a debt of £ 2090/. B (In those days an agreement to marry was legally binding). who subsequently asked for time to pay. an allowance if he would marry his fiancée. interest and cost a greater sum. Pinnel’s Foakes v case: Beer  A lesser sum is not a good consideratio n for a his The promise was binding. Payment & satisfaction of a smaller sum was not consideration for the promise to accept this amount in satisfaction of a debt.claimant sued father-in-law Performance Shadwell v of an Shadwell existing  contractual obligation is sufficient consideratio n to support a promise from a third party.
For months the company. which was in severe financial difficulties. who had become aware of the It was held that the company was entitled to succeed. had completed some work for Mr. Foakes paid £500 immediately and the rest by half-yearly installments of £150.she sued for £ 360/interest on the judgment debt which the defendant refused to pay. a small building company.higher sum.. pressed for payment. Payment by D&C cheque gives Buildings v no benefit Rees over and  above payment in cash ( a lesser sum is not a good consideratio . would take no further action Dr. Rees for which he owed the company £482. The judge was of the view that it was not unfair for the creditors to go back on their word and claim the balance as the debtor had acted unjustly by exerting improper pressure. Eventually. The Ps. After receiving £ 2090/. Rees. Foakes had not provided any in the matter provided that consideration. Mrs.
She added that if the company refused this offer they would get nothing. contacted the company and offered £300 in full settlement. exploit the High Trees Because of the outbreak of situation by House Ltd war in 1939. v annual rent of £2500. company's problems. Doctrine of Central In 1937 the Ps granted a 99 promissory London year lease on a block of flats is estoppel: Property in London to the Ds at an You cannot Trust Ltd.n for a higher sum). It was held that they were entitled to recover this money as their promise to accept only half was intended to apply during war conditions. the Ds could going back not get enough tenants and  against your in 1940 the Ps agreed in . Ps were estopped from going back on their promise and could not claim the full rent for 1940-45. The company reluctantly accepted a cheque for £300 "in completion of the account" and later sued for the balance.
but when the husband failed to implement his promise she sued to enforce the agreement relying on his promise and the doctrine of The wife was not a in apposition to enforce the agreement as she lacked consideration on her part. The wife did not apply to the court for a maintenance order. Ds – Defendant 1945 all the flats were occupied and the Ps sued to recover the arrears of rent as fixed by the 1937 agreement for the last two quarters of 1945.own words writing to reduce the rent to £1250. after their divorce. free of income tax. Combe v Combe [ 1951] A husband entered into a contract promising his wife to pay £ 100. After the war in * Ps – Plaintiff .00. . The equitable doctrine did not create a new cause of action where none existed before. The doctrice of promissory estoppel does not create a new cause of action where non existed before.
A statement of quality Bannerman A buyer of hops asked by The court decided that the sulphur the seller whether sulphur was a vital part of the contract. Husband promise was enforceable the agreement having been made when the parties were not living together courteously. v white . Agreements between spouses about to or already separated are legally binding. A legal relation is assumed where a husband deserts his wife and an agreement is concluded of the ownership of the matrimonial home occupied by the wife and children.promissory estoppel. The wife implemented her promise but husband did not. He alleged that his promise was a domestic relation not giving rise to a legal relation. Merritt v Merritt  A husband separated from his wife wrote and signed a document stating that in consideration of the wife paying off the outstanding mortgage debt of £180 on their matrimonial home he would transfer the house into her sole ownership.
The seller who was not a car dealer with experience knowledge did not intend to be bound contractually by his statement concerning the age of the vehicle. The registration book appeared to confirm this statement but it had been altered by some previous owner and the car was infect a 1939 model The statement was in innocent misrepresentation but not a term of the contract. Sulphur had been used. The A wharf (dock) owner made The court implied a term into the .based upon which a contract is made as far as buyer is concerned. considered a term.  had been used in the Around which the whole deal treatment and added that if revolved it was a term. v Williams  William on selling a car to the claimant company of car dealers asserted that it was a 1948 model. it had he will not buy. The seller assured him that sulphur had not been used. An assertion made by person who is a layman for those goods being sold is not considered a term. Oscar Chess Ltd.
Breach of a warranty does not Bitteni v A tanner Bitteni who added The obligation to appear in the Gye  to sign in a series of rehearsal was a mere warranty and concerts and to attend 6 Bitteni breach could not be treated . Madame Poussard v A Poussard agreed to sign a Spiers series of opera for Spiers. Such implied terms are based on the presumed but unexpressed intention of the parties.Moorcock an agreement to permit a case  ship owner to unload his ship at the dock the ship was damaged when at low tied it was grounded at the bottom of the river on a hard ridge. agreement that the river bottom would be reasonably safe. The obligation to appear on the opening night was a condition and since madame Poussard was in breach of this condition Spiers was entitled to treat the contract has at an end. soprano. Contract is termed void on breach of a condition.  she failed to appear on the opening night and was refused for her services for her subsequent nights she sued for the breach of contract.
A non Hansa Nord serious  breach of an innominate term can only result in claim for damages. An exclusion clause A notice in a hotel room This was ineffective because the Olley v cannot be Marlboroug excluded liability for loss or contract for accommodation had . Gye was accordingly in the breach of contract when he refused Betteni services for the remainder of the contract.make the contract void. as an end of the contract. days of rehearsals beforehand failed to appear for the first 4 days of rehearsal Gye in consequence refused Bitteni services for the balance of the rehearsal and performances Bitteni sued for the breach of contract.
normal loss.introduced into contract after it has been made. h court  damage to guest property. contract. There are two types of loss for which damages may be recovered: General damage . from the breach of during the period of delay. or as may reasonably be supposed to have been in contemplation of both parties at the time they made the contract. Only natural losses reasonably foreseeable by a bystander can be claimed for. . Hadley v A carrier was given a He was not liable for the loss of Baxendale mill-shaft to deliver to a profit and the rule was formulated plant manufacturer as a as follows:  model for making a new · The loss should be such as shaft the carrier delayed in may fairly and reasonably be delivery and unknown to considered either arising him the mill stood idle naturally. been made at the reception desk.
company.Special damages loss. Payment was in form of cash shares and debentures when the company was eventually winded up it was agreed that Salmon and the company was the same and he could not be the creditor of his own so his debentures would not have any effect.  Salmon had been in the boot and leather business for some time together with other family members he sold the old business to his newly formed Ltd. abnormal House of lord held that since there was no fraud involved his debentures were valid the company was properly constituted and therefore it was a separate legal personality from Salmon. A company is a separate legal entity having its own assets and liabilities. A company Lee v Lee’s An aerial crops spraying Although he was majority share . Salmon v Salmon & company Ltd.
Lee Ltd. specific performance sold the land to a company of which he was a controlling member. A sham company is also liable along with the related violator.  was a majority shareholder and was the sole working director was killed while piloting the air craft. an English registered It was unsuccessfully argued that company was involved in the veil should be lifted between mining asbestos(a form of the companies so as to enabled the Adams v Cape industries .is a separate legal entity. holder and the sole working director of the company he and the company separate legal persons and therefore he could also be and employee of it for the purpose of relevant statute with rights against it when killed in an accident in the course of his employment. Air farming business in which Mr. Court is not free to this regard the principle of Jones v Lipman  L agreed to sell some land The company was sham and to J. L than changed his specific performance extended not mind and in order to evade only to L but also to the company. Cape.
a well known store in Piccadilly.S had a court judgment against it. a company incorporated and carrying on business in the U. v Fortnum Ltd.Salomon v Salomon unless carefully watched. The defendant carried on business as an importer of low price to goods from Hong Kong and China and then exported to Europe. The defendant did not apply its name to the goods themselves There was no evidence that any costumer of the claimant store would buy the defendants good thinking they were the claimants therefore the action failed. The claimant. Fortnum & Mason Ltd. various subsidiaries one of its marketing subsidiaries. against the defendant.  . CPC.  mineral) in south Africa and judgement to be enforced against marketing it world wide to cape. London bought an action in the tort of passing off.
Failure of German substratum date coffee may result in Co. There was a failure to carry The company would be wound out the object of making up. The company entered into a contract to purchase a concession for constructing a railway. coffee from dates by means of a German patent (although the company did manufacture it with a Swedish patent).Any contract Ashbury not Railways authorized Carriage v by the Riche objects  clause of a company is termed ultra virus. The articles in all Hickman v The Co. The Kent  a clause to the effect that all Company could enforce the .’s articles included The proceedings were stayed. The objects clause of the The contract was ultra virus and company set out purpose of beyond the capacity of the the company as the making company. and selling of railway carriages.  winding up of company.
clause against a An alteration Greenhalgh The issue was the removal of articles of v Alderne from the articles of the association Cinemas members’ right of first can be made refusal of any shares which  in the best a member might wish to interest of transfer. disputes between the arbitration company & its members member. the majority wish the to make the change in order company. A member brought court proceedings against the Co. business completely with . to admit an outsider to membership in the interest of the company. The benefit to the company as whole held to be a benefit which any individual hypothetical member of the company could enjoy directly or through the company & not merely a benefit to the majority of the members only.respects are enforceable by company against its members. of articles of b Kershaw a member who carried on a association leese & Co. An alteration Sidebottom The alteration was to expel The alteration was held valid. were to be referred to arbitration.
Alteration to the articles is only subject to the alteration by S9 CA 1985. The Co.  the company. . had the power to alter its articles by extending the lien to fully paid shares.to expel a member in the best interest of the company can be made with compensatio n.’s articles provided for a lien (a right over another’s property to protect a debt charged on that property. Z held fully paid & partly paid-up capital in the company. Company Aleen v has the Gold Reefs power to  alter its AOA with a retrospective effect. The It was held that the Co.) for all debts & liabilities of any member upon all partly paid shares held by the member. Rights in the articles are limited as to their duration by the articles which confer them.
South Foundries ltd. by special resolution altered its articles so that the lien was available on fully paid-up shares as well.Co. D . The fact revealed that the director with majority shareholders were raising share capital not with the intension to favour all but. ltd dilute a  shareholder’ s voting right P held 45% of the shares. constituted a breach of their contract of service. he was dismissed. the reason was to dilute the minority voting control. it was contrary to the agreement that he should serve for ten years. after the articles had been changed empowering his removal as director. A general meeting was held for the issue. although effective. The court awarded them damages for wrongful dismissal since the alteration of the articles. v Shirlaw  A managing director was appointed under contract with a company for ten years but. Claim can be made on breach of a service agreement due to alteration of the articles. which became impossible when he lost their directorship. d held 55%. D along with other directors decided to increase the nominal share capital. The directors were Raising Clemens v Share Clemens Capital to Bros.
directors were engaged with a party for sale of shares at a price which was considered to be high of the current deal.’s secretary for any party interested to buy their shares – Shareholders then sold shares to Chairman. so under no duty does the director is liable to act for the best interest of an individual. The shareholders wished to The director owe a fiduciary duty to company but not to individual shareholders. Co. . deterrence 7 alleged that the purpose of this was to dilute her voting control below to 25% & therefore deprive of her power to vote special resolution. could have sued the director if any would have done. Percival v Wright  Some Shareholders asked Co. P showed miss using their power. The directors owe no general duty to individual members. favoured. Later it was revealed that at the time of negotiation.is an improper purpose & shall not be validated.
return back. They formed another company (D) just because of getting a new contract. But regal was not It was held that Directors could not retain benefits of the Co. The director could not use their voting control to bring a loss to the minority. (T) were equally divided on its directors. Directors cannot attain any benefit from there office by breaching their fiduciary duties. . Regal (hasting) ltd. Three directors of (T) were not willing the Co. owed a cinema & wished to buy two more cinemas & later sell them all as going concern. Others directors sued. These directors later sold a plant by majority voting to D. (T) to themselves. Cook v Deeks [ 1916] Shares of the railway Co. v Gulliver  It was held that Directors used their special knowledge to gain hidden profits. They were accountable for the profit made. to have the contract. It was a breach of duty. The company got a contract. Director cannot make profit from there position as Regal (hasting) ltd.
got less. . managed amount. real applied for majority shares. Colle because of having interest in the contract. resigned & accepted the contract in his own capacity. Fiduciary duties survive even after the directors leave the company. A company wanted to give a contract to Colle not to IDC. He was in a breach of fiduciary duty as he preferred to earn profit for his own sake and acted against the best interest of the company.directors regardless of their motives or consequence s to the company. in financial position to buy the two cinemas. sold cinemas as going concerns. Fiduciary duty exited even after his resign from the company. Some directors were not were not agree. Regal with some directors formed another company. IDC v Cooley  Colle was a director of IDC. regal got more profit portion where as co.
because being aware of the going concern problem. In Feb. 87.A director should not be allowed to contract with his own company. since .’s secretary of The court required the directors to contribute for £ 75000/. Contracted for chair from a claimant partnership. he has directors recognizing committed expected liquidation carried wrongful on trading. A Company Panorama Co. Wrongful attitude observed. trading was carried on. Company was entitled for avoiding the contract. The director was interested at both sides but couldn’t bargain for the company. (of which the director was a member). directors were sued. trading.’s assets. personally Consortium built up an overdraft. Aberdeen Railway v Blaikie  Co. Suffered loss. had a liable for Ltd. [ 1989] continuing loss – Liabilities debts & exceeded assets (between liabilities if 1980 – 87). A director is traded Produce Company made Marketing successfully for 9 years. No question should be raised for fairness / unfairness of the contract.in Co. the The contract was binding.
make but used personally. parties on behalf of his company. authority can Furnishing was to be used in business.secretary ordered a hiring of cars was usual to the Developme defendant within his nt v Fidelis Limousine & stated that it office of company’s secretary.  contracts Secretary usually hired cars with third in the past. End of Cases Glossary of Legal terms: .
not a cause of action. The prosecution must prove either that the accused knew his action was illegal or that he was reckless or grossly negligent.) The person being sued is generally called the defendant or respondent. which means the assets are distributed without preference between them. . Anyone who wishes to rely on the defense of estoppel to defend an action must request it. Obiter dicta: (Latin: sayings by the way) Observations by a judge on law or facts not specifically before the court or not necessary to decide an issue. Plaintiff: Person who brings a case to court. Pari passu: (Latin: with equal step) Often used in bankruptcy proceedings where creditors are said to rank pari passu. word or action.Estoppel: Rule of evidence which prevents a person from relying on facts when. Some offences (such as drunken driving) are matters of strict liability. he has led another person to act to his detriment on those facts. by deed. which means that the intention or state of mind of the person committing the offence is irrelevant. Estoppel is a defense. (Also called the petitioner or applicant. Mens rea: (Latin: guilty mind) Most crimes require proof of guilty intention before a person can be convicted.
duress or undue influence) or by agreement of the parties . once a court has made a decision on a certain set of facts. Sanction: To ratify. to approve or to punish. lower courts must apply that precedent in subsequent cases which embody the same facts. Subpoena: (Latin: under penalty) Court order requiring a witness to attend at a certain time and place or suffer a penalty. Rescission can occur because of some defect in the formation of the contract (such as misrepresentation.Quantum meruit: (Latin: as much as he has deserved) Principle stating that a person should not be obliged to pay (nor another allowed to receive) more than the value of the goods or services provided. Quorum: (Latin: of whom) Minimum number of people necessarily present at a meeting for business to be validly conducted. . had there been no contract. Stare decisis: (Latin: to stand by decisions) Policy whereby. Without a quorum.for example where they reach a new agreement. Rescission: Abrogation or cancellation of a contract. decisions are invalid. putting the parties in the same position they would have been in.
Ultra vires: (Latin: beyond the powers) an action which is invalid because it exceeds the authority of the person or organisation which performs it. A company cannot normally be bound by an act which it is not empowered to do by its memorandum of association. Sham: A person or thing pretending or pretended to be what he or she or it is not. .
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